RE:With the average of 3 analysts expecting revenue of $18.97mGuidance unchanged but it's pretty clear they will meet or exceed it.
Consolidated revenue for Q1 2024 was $20.9 million
Adjusted EBITDA
( 2 ) for the quarter was $4.1 million
2024 Financial Guidance Unchanged
Our annual financial guidance remains unchanged from our April 18, 2024 press release. Kraken expects revenue between $90.0 million to $100.0 million and Adjusted EBITDA
( 2 ) in the $18.0 million to $24.0 million range.
Management Comments
“We are off to a strong start to 2024 with strength across all areas of our business, record Q1 revenue (up 175% year-over-year), and solid adjusted EBITDA ( 2 ) margins of 20%. With our recently closed $20 million equity financing and $45 million of new committed credit facilities, our balance sheet has been strengthened as we pursue and execute on multiple sizeable subsea defense and commercial programs,” said Kraken President and CEO Greg Reid. “Our participation at various trade shows, customer demonstrations, and UUV user groups continues to re-affirm the strong demand signals we see in the market and our solid competitive position. At the beginning of the year when we quoted a sales pipeline of more than $900 million, we noted that we would only be providing numerical updates on an annual basis, not quarterly. However, through the first five months of this year, we can say that our sales pipeline has expanded significantly from the beginning of the year as we gained clarity on certain large programs and our strengthened business development teams explore ancillary market and geographical opportunities for our sonar and subsea power solutions. Below I highlight some recent industry observations.”
- There continues to be an increasing focus on the surveillance and security of critical underwater infrastructure (CUI). These subsea fiber optic cables, pipelines, and power cables drive are essential to national security and the normal functioning of world economies. CUI, while previously rarely talked about in the public domain, is top of mind for politicians in many countries.
- There is an increasing focus on naval defense and subsea warfare as multiple regions see increased geopolitical tensions, from the Baltic, North, and Black Seas, to the Persian Gulf and Red Sea, to the IndoPacific and even the Arctic.
- The growth of unmanned systems in the subsea domain, while years behind the growth curve of the aerial domain, is coming on strong. In this market, where technical challenges abound due to the operating environment, subsea drones are seen as a complement to very expensive, exquisite surface warfare assets and submarines, providing an attritable capabilities gap filler.
- In the mine warfare arena, a renewal cycle is occurring and now being accelerated by challenging geopolitical situations across the globe. Many navies around the world are in various stages of planning and executing these upgrades with multiple large tenders in the market or coming to market in the next 3 years. With our growing track record of success in this area, our expanding customer base and deepening relationship with various navies, UUV, and USV companies, we feel well positioned to capture significant new business.
- Customers are looking for lower cost force multipliers. In providing high end sonar and subsea batteries to UUV companies and navy end users, we are providing customers with two of their most important needs: access to high resolution data to make better decisions and longer endurance for their unmanned underwater assets. To use an analogy, we are providing the picks and shovels in the subsea gold rush.
- In 2024, we are investing significant efforts in customer demonstrations and participation in naval defense exercises in the US, the Baltic Sea, the Black Sea, the Mediterranean, the Middle East and the IndoPacific. At REPMUS (Robotic Experimentation & Prototyping with Maritime Unmanned Systems) this year, we expect to support Kraken’s synthetic aperture sonar on UUVs from 6-7 allied countries. Hosted by the Portugese Navy and NATO, REPMUS brings together numerous foreign militaries, research institutions, and technology companies and is a core exercise for developing maritime unmanned systems, operational tactics, and command and control.
- Outside of defense, commercial market activity is strong, driven by the development and maintenance of offshore wind and offshore oil and gas infrastructure. In these markets, we offer technology differentiating solutions for seabed and sub-seabed intelligence, that is needed in both the buildout phase as well as operations and maintenance phase of offshore energy. Momentum in this market is visible as numerous suppliers and customers in this market post strong financial results and growth outlooks and M&A activity grows. We recently won a $8 million contract for an Acoustic Corer job and expect of our offshore services business to record its best year ever, building from our acquisition of PanGeo Subsea in 2021. In addition to being an attractive growth market, this market allows us to “eat our own cooking” as our field operations teams are tightly in tune with equipment performance and customer feedback, which feeds back into our technical roadmap and engineering for existing and future products.